Speaking at the Centre for International Finance and Regulation conference in Sydney last week, Mr Kell said ASIC’s approach over the past 15 years has been “anything goes as long as you disclose”.
“The role of disclosure is an underlying principle in structuring your regulatory requirements and regimes,” Mr Kell said.
“That was central to the [1997] Wallis Inquiry regulatory philosophy and is central to ASIC’s powers,” he said.
“The approach we have had over the last 15 years has been ‘anything goes as long as you disclose’, that you can issue any sort of product out there – which has certainly enabled a wide range of choice – and you can have any sort of remuneration structure with conflicts of interest imbedded in it, as long as you disclose,” said Mr Kell.
“ASIC would make the case that conflicts of interest, especially in retail markets, are not particularly well addressed by disclosure and it’s time to rethink that philosophy,” he said.
“We have had a situation where too often disclosure has been the answer but we have forgotten the question.”
The regulator is increasingly looking at areas where disclosure does not address market issues, Mr Kell added
“We are looking into areas where disclosure is not addressing the market failure, not improving market outcomes, but all it is doing is imposing costs on those that have to produce the disclosure documents,” he said.
